SMUD offers battery storage incentive for residential customers

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California public power utility Sacramento Municipal Utility District is rolling out a new battery storage incentive program for customers.

Since July 1, SMUD has been offering residential customers $300 to aid in procuring battery systems aimed at reducing peak demand. While the incentive is only a fraction of the $7,000 to $12,000 it may cost customers to install a battery system, SMUD views it as a tangible sign of its commitment to an evolving technology that may transform the power industry in the coming years.

The incentive is the first step in a larger effort to have 9 MW of energy storage installed within SMUD's service area by the end of 2020, said James Frasher, the utility’s senior strategic planner for energy storage.

"From our standpoint, because we're starting to see these systems installed” and are beginning to see customer interest, “we're taking a proactive step forward to encourage these installations," he said. "Because if we wait until 2023 and it's more cost-effective, the industry is already going to be filling that need."

One of the early problems SMUD identified, he added, "is we didn't have good visibility into these projects being installed. They were all being done in connection with solar energy. For us, we weren't part of that conversation. What we're really trying to do is put in place systems to engage with customers” in that conversation “to understand what value energy storage brings."

Frasher acknowledged that, currently, energy storage is "not quite cost effective" in SMUD's territory. But it probably will be by 2023, he said, explaining the utility’s interest in helping its customers prepare for such an eventuality.

He stressed SMUD is "not using the incentive to create the market,” but rather to help SMUD “engage with those customers, especially those customers already making that decision" to install and operate a battery system in the most cost-effective manner possible.

While it is early in the program, customer response to the incentive so far has been good, he said.

"From a very high level, we're expecting several hundred customers this year,” he said. "Right now, we're hoping to hit that 9-MW goal by 2020 and have that ramp up to 28 MW by 2023 and 75 MW by 2028."

If that latter figure is reached, that probably means up to 10,000 residential and business customers are participating in the battery storage program.

Individual savings for customers who install battery systems are hard to quantify at present. One reason is the variety in such systems. Smaller, less expensive, systems, for instance, may not be sufficient to power an air conditioner in a power outage.

However, SMUD is switching to time-of-day residential electric rates in 2019 that should help customers better plan to use less electricity at peak times when it is more expensive. That is where batteries, which can store energy earlier in the day for use during these peak demand times, can help.

As the technology creates more value and battery storage costs start to decrease, SMUD plans to be "more aggressive in encouraging adoption and getting people to opt into battery programs," Frasher said. "We hope to be making that transition over the next three years and increasing the overall value to both the grid and to the customers."

SMUD is spreading the word about the new incentive program through its website and through local battery storage contractors. "They're already out there trying to sell these systems," Frasher noted.